A recently released report has shown that banks are on or ahead of schedule to meet the 2020 deadline in place to implement payment methods for staff that are service-focused rather than sales-driven.
Because staff pay was an area of concern that again arose in the royal commission, the industry arranged for a ‘check-up’ to make sure that banks are taking the necessary action to be compliant by 2020.
It was in April 2017 that an independent review was first carried out to examine flaws in the ways that banks were rewarding staff for selling retail products like mortgages, credit cards or deposit accounts.
The report was commissioned by the Australian Banking Association (ABA) and conducted by former public service commissioner Stephen Sedgwick AO.
Sedgwick made 21 recommendations in his final report, intended to better align the priorities of the bank and its staff with the best interests of the customers.
As part of the initiative, bonuses were no longer to be linked with achieving certain sales figures or moving a specific product. Instead, incentives were to come along with providing the highest level of service and securing favourable outcomes for customers.
“The [subsequent] report has found banks have been on the front foot in implementing the ‘Sedgwick reforms’ to bank staff pay, with many on or ahead of schedule in overhauling their salary structures,” explained ABA CEO Anna Bligh.
While the check-up was generally optimistic, there is still need for further action.
One non-compliant practice still evidenced at certain locations are leaderboards which track individual sales performance and are not in line with the new customer-oriented model being pushed.
In his final report, Commissioner Hayne expressed that while the Sedgwick recommendations seemed like a solid step towards improving remuneration practices, they will only have a lasting impact if banks take heed “both in letter and in spirit.”